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State insurance regulators are moving ahead with a project that could affect the indexed annuity community: revising the rules for use of relatively new investment indexes.
Members of the Annuity Disclosure Working Group plan to meet Thursday, through a conference call, to talk about the project.
The working group is part of the National Association of Insurance Commissioners. The working group has been developing an update of the NAIC's Annuity Disclosure Model Regulation.
A discussion draft released in February would set the following rules:
- An annuity issuer using an investment index in existence for less than 20 years could illustrate the performance of that index only if the index was a combination of other indexes that had all been around for at least 20 years.
- An issuer illustrating the performance of an index that is younger than 20 years old would have to warn that some of the values of the index shown in the illustration were hypothetical.
The NAIC
The NAIC is a Kansas City, Missouri-based group for state insurance regulators.
States often use its models when starting to develop their insurance laws and regulations.
The Index Issue
Traditionally, most issuers of indexed annuities and indexed life insurance products offered indexing options based mainly on the S&P 500 stock index.
